Due February 11, 2009
Roberta Lerner, accountant at Wilson Industries, is performing an assessment of the
accounts receivables at the end of the 2008 fiscal year.
First, Lerner finds that the
existing credit balance in Allowance for Uncollectible Accounts is $45,000.
finds that the Accounts Receivable balance is $1,381,000, debit.
experience, Lerner has found that accounts not yet due proved uncollectible 0.4% of the
time, accounts past due less than 30 days proved uncollectible 3% of the time, accounts
30 days to 59 days past due proved uncollectible 12% of the time.
For accounts 60 to 89
days past due, the figure was 60%, and for accounts 90 days or more past due, the
uncollectible fraction was estimated to be 90%.
Lerner looks over the entire Accounts Receivable record and finds the following amounts
in each category:
<30 days past due
30-59 days past due
60-89 days past due
90 days or more
Perform an aging of the accounts receivable and provide the adjusting journal entry
that must be made to account for Bad Debt Expense during 2008.
800,000 × 0.004 + 420,000
× 0.03 + 90,000 × 0.12 + 60,000 × 0.6 + 11,000 × 0.9 = $72,500
The desired balance in Allowance for Uncollectible Accounts is $72,500.
balance (prior to adjustments) is $45,000.
So, $27,500 must be added to it.
Dec. 31, 2008 Bad Debt Expense
Allowance for Uncollectible Accounts
The balance in Accounts Receivable was $1,247,500 at the start of 2008.
year, accounts totaling $37,400 were written off.
Sales on account totaled $11,780,000
for the year.
Find the amount of cash collected from credit customers during the year.